Enlightenment Through Understanding

A vote for the GOP is a vote for growth

As shown below, the Bush tax cuts coincided with the bottom of the DJIA in 2003:

The Bush tax cuts broadened the tax base, softened the blow of the 2008 banking problem and aided in the subsequent recovery. Economist Paul Krugman wrote in 2007:

“Supply side doctrine, which claimed without evidence that tax cuts would pay for themselves, never got any traction in the world of professional economic

research, even among conservatives.”

It doesn’t really matter if the tax cuts paid for themselves or not. While they may have contributed to the national debt, the money was essentially free as evidenced by record low treasury yields and non-existent bond-based inflation. In other words, the predictions of hyperinflation didn’t happen. Tax cuts contribute to the economy in more ways than just giving consumers extra purchasing power; they also contribute, indirectly, by creating an inflationary environment that boosts a wide variety of asset prices like stocks and real estate.

These tried and true republican policies of tax cuts, defense, and free market capitalism do win over voters. In 2000, the Al Gore team scoffed at Bush’s tax plan that, according to a political ad, would give the richest of Americans enough money to buy and extra car and the poorest not enough to buy a rusty muffler. It failed. Voters were happy to have some extra spending money and it didn’t matter that the rich got more because in the end, everyone was better off. That how you win elections: by making as many people as happy as possible and tax cuts do just that. The GOP didn’t used to be so pessimistic and angry about the economy, higher education, the American dream, or the youth. The GOP should return to the pro-growth policy and optimism that lead to the election of Reagan and Bush and abandon this recent obsession with deficits, the fed or the NSA. They are important issues to a vocal paranoid minority of various blogs, but to the majority of Americans these issues yield priority to the trio of tax cuts, defense and homeland security.